Monthly Archives: November, 2011

Donating annual leave

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Q. I recently donated annual leave for a fellow postal worker who has been injured.  Is the value of this donation tax deductible? A. This is really a question for your tax preparer or a CPA, but I doubt that it would be deductible since it has not yet been taxed as income.

Returning to federal service

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Q. I worked for the government for three  years a long time ago and returned recently. I will be eligible to retire at age 62 in about three years.  I plan to work until 67, if possible. Should I roll over the 401k funds that I have collected into the FERS system?  What are the advantages and disadvantages? A. The TSP offers what is, in the opinion of many independent experts, the best retirement investment vehicle available anywhere. It offers low cost, ample diversification options, convenient management and the unique G Fund. I generally recommend that my clients move as…

Early retirement

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Q. My activity is offering voluntary separation incentive payments/voluntary early retirement.  I am 56 years old, have 22 years in service under FERS.  Do I get the 5 percent penalty if I accept the offer?  Am I allowed to withdraw monthly on my TSP? A. Since you will retire during or after the calendar year in which you reached age 55, you will have access to your TSP account without the early withdrawal penalty.

TSP money

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Q. If I withdraw $20,000 from my TSP account at retirement, are taxes taken from the amount or do I just have to claim it as income that year? A. Twenty percent withholding is mandatory and you must claim the withdrawal as income on your tax return for that year.

Ideas that can boost your retirement income

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Of all the rules of thumb for living, none are more misunderstood, or more dangerous, than those aimed at retirement financing. Take, for example, the widely quoted — and too often used — rule that you will be comfortable with, and should plan to live on, about 70 percent of your preretirement income in retirement. For some of us, that will be plenty; for others, not nearly enough. Using advice tailored to an “average” employee is risky. In my professional experience, I’ve seen a bias in favor of maintaining, or even increasing, standards of living in retirement. Chances are that…

Inheritance money

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Q. I’ll be receiving a check this week or next from an inheritance.  I’m not maxed out on my TSP and haven’t sent any catch-up money in this year either.  I was wondering if I could send 100 percent of my pay for the last couple of pay periods this year to TSP to get as much in there before the end of the year as possible?  Then next year I’ll start putting in the maximum along with catch-up. A. Your TSP contributions must come from payroll deferral or, you may transfer eligible money into your TSP account from an…

TSP catch-up

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Q. I see that 2012 will have 27 pay periods. In current and previous years I divide the maximum allowable TSP and catch-up contributions by 26 to calculate my payroll deductions. Is the process the same in 2012, but divide by 27?  Or should I stick with 26 pay periods because 2012 will run to Jan. 12, 2013 and so pay period 27 will be in both tax years 2012 and 2013? A. Pay and reporting schedules are agency-specific, so you’ll have to ask your payroll or HR officer this question.

Retirement buyout

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Q.  I am a CSRS/FERS offset employee with 31 years and I have been offered the  VERA/VISP.  I would like to know how my retirement would be calculated for a VERA/VISP and how will it affect my retirement.  How do I find out what the numbers will look like for a retirement check before I decide to take the buyout?  I also have been depositing the max in my TSP account and I see that the government is not required to match it. Is it the agency you work for that decides if the government matches the TSP or not?…

Disbursement at retirement

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Q.  I am 58 years old, in FERS, and plan to retire in two months. I am going to roll over my TSP into an IRA and take a large disbursement to pay some bills and get set up. I understand, at retirement, that this one-time disbursement will not be subject to the 10 percent early withdrawal penalty. However, I have an outstanding loan balance with my TSP. I wanted to use part of my disbursement to pay this loan off, but have been told by TSP it will be considered another disbursement — but it will not be subject…

Withdraw TSP fund without penalty

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Q. I am taking VIRA/VSIP and am age 53. I have 26 years time in service and my minimum retirement age with 30 years of service is in 2015 at age 57.  When can I access my TSP funds without being subject to the 10 percent withdrawal penalty? 1. Most literature indicates that if you retire early in the year 55 or later, you can withdraw immediately without penalty. 2. The TSP board (I called twice already) says only 59½. 3. The FERS handbook states you can withdraw without penalty at MRA with 30 years (my case 57). I would…

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